Ticketmaster, a company dreamt up by three college-age computer programmers who needed to make a living, has been disrupting — and dominating — ticketing for 40 years.
Turning points are the norm, not the exception, and history depends upon your seat at the show, but no one is more aware of the chain of events that created today’s Ticketmaster than Albert Leffler, founder and company historian. Market Researcher Leffler, Computer Programmer Peter Gadwa and Businessman Gordon Gun comprised the three students at Arizona State University who saw the problem to be solved 40 years ago.
Leffler divides the ensuing decades into three eras: before the Internet, which encompasses the first 20 years (1976-1996) of growing the business by adding more clients, adding more outlets and selling more tickets; the post-Internet era, 1996-2011, which kicked off when Ticketmaster sold its first online ticket to a Seattle Mariners game and emphasized Ticketmaster as a marketing partner; and the technology era, which became the primary focus when Ticketmaster merged with Live Nation in 2010 to become a fully integrated entertainment company.
“After the merger and the vision of Michael Rapino and now our president, Jared Smith and the tech team and the executive team that has been assembled here, this is just like going to the moon now,” Leffler said of Ticketmaster today. “They are funding TM, in particular, with the kind of assets and capital improvements and money to do the things that we have been needing to do.”
User Allen Johnson, Orlando Venues, who is part of Ticketmaster’s National Technology Advisory Board, agrees wholeheartedly, noting that through all his years with Ticketmaster, dating back to the 80s at the Lakeland (Fla.) Civic Center, this is the era when Ticketmaster is truly listening to the end user. “We’re telling them what we want instead of ‘this is what you get,’” Johnson said, adding the technology has made amazing leaps forward.
“I like to think of it as when Ticketmaster got its moxie back,” Leffler said of the Live Nation era. “I think we would have been doomed without the merger with Live Nation. I think the business model that Michael [Rapino] has put together, where there is this synergy between the artist, the promoter and ticketing and sponsorship is unbelievable and I don’t think anyone has that vision other than Michael.”
THE FACES OF TICKETMASTER
The industry’s view of Ticketmaster’s history always has a face.
Denzil Skinner, former CEO of what is now Mercedes-Benz Superdome, New Orleans, recalls those early deals as a mash-up between Charlie Hamby from Ticketmaster and L.N. Pritzger of Hyatt Hotels fame.
Skinner remembers when Hamby brought Ticketmaster’s computerized ticketing solution to his 80,000-seat, hard ticket stadium, it “sounded good.” But Ticketmaster was a big risk for a National Football League stadium, so they opted to run a test in Albuquerque, N.M., at The Pit, to see if it would work.
“He had it going within 30 days and I had a couple of my ticket people review the system. Everyone felt pretty comfortable with it,” Skinner said. While installing the system, Hamby talked about needing capital to expand, so Skinner took him to Chicago to see “my owner, A.N. Pritzger,” who owned Facility Management Inc.
Pritzger made $250,000 available to Ticketmaster to expand in return for a partnership position. Ticketmaster kept expanding and, in the process, Pritzger kept putting more money in. In 1978, he bought it outright for $4 million and hired Fred Rosen as CEO. Five years later, Pritzger brought in Herb and Melvin Simon as partners.
In 1990, Pritzger sold to Paul Allen, of Microsoft fame, for about $300 million. “By the time Paul Allen bought the company, Ticketmaster was all over the country. It had grown exponentially,” Skinner said.
Future Chairman Terry Barnes joined Ticketmaster in Indianapolis in 1983 when the Simon brothers came on board. Barnes had previously worked with the Simon family in a record business enterprise.
In January of 1987, Barnes moved to Chicago to develop a territory, which eventually expanded to 22 states. Rosen, who was moving between New York, Chicago and L.A., decided he had to move to L.A., because that’s where the industry is, Barnes said.
Then Rosen made Barnes president of the company and moved him to L.A. It was near the end of 1995. Ticketmaster was just closing its first era of 20 years of growth.
Allen then sold to Barry Diller for stock in Home Shopping Network, which became USA Networks, in 1994, Barnes recalled. Diller became the chairman of Ticketmaster and USA Networks turned into IAC.
Rosen left in 1997 and Barnes became president, ushering in the marketing era of Ticketmaster. He and Diller hired John Pleasants in 1999 as CEO and Barnes became chairman.
“John Pleasants was working for CitySearch, another company Barry bought,” Barnes said. “He was very charismatic, very smart. The Internet was going crazy. We put CitySearch together with the online part of our ticketing, and it became Ticketmaster Online CitySearch, probably the worst name ever for a public company.”
Ticketmaster outlets were still the bricks and mortar company. It soon became apparent running a split company was a mistake, so it was realigned as one company under IAC. Online traffic continued to drive the business.
“At one time we had 16-17 phone rooms around the country. When I left, we had one or two customer care centers, to take care of the online orders primarily,” Barnes said of the changes.
In the beginning, Leffler and his partners built a totally integrated system where all the tickets were on one manifest, Barnes said of the evolution of the company. The competition was sending blocks of tickets to each outlet, so it was not a level playing field. Ticketmaster was the first to change the model, realizing the client controls the ticket, not the public.
“We competed fiercely with Ticketron, they were the ones who were there. We acquired them in 1991. That was big,” Barnes said.
Barcoding was another game changer, and it made print-at-home tickets possible. “We were nervous about letting people print tickets at home,” Barnes recalled.
Ticketmaster merged with Live Nation in 2010. Nathan Hubbard was CEO at the time.
Jared Smith is now the face of Ticketmaster. “We hired Jared long before I left and knew we had a star,” Barnes said. “His rise was expected.”
John Pleasants left in 2005. Next up was Sean Moriarty, who left in 2009 after Ticketmaster acquired Front Line Management and Irving Azoff came on board.
Under Azoff’s regime, Ticketmaster emphasized helping clients market tickets, Barnes recalled. But the constant has always been listening to the client.
Rosen was the first to see that the client was the venue, Leffler said. Prior to Rosen’s era, ticketing was a cost. Rosen changed the business model, charging a fee to consumers for the convenience of buying a ticket at an outlet or on the phone versus driving to the venue’s box office.
“The standard model that we started was a two-prong revenue stream,” Leffler recalled. “One prong was a relatively minor convenience charge that the customer paid. The other revenue stream was that on every ticket that we sold there was an inside charge, a commission, 1-5%, depending on the deal. The clients were actually paying for the service.”
Rosen wiped out the inside charge and increased the service charge, which he then shared with the client, Leffler said. “All of a sudden the building managers, who were having to pay more and more for the acts and promoters, were able to keep some money themselves and Ticketmaster took the heat. We didn’t advertise the fact that part of that service charge was being shared.”
Exclusivity was also part of the longterm deals Ticketmaster made during the Rosen era. In turn, Ticketmaster promised to provide better software and services and more distribution points, Leffler said. The business model was all about volume.
Ticketmaster also grew through acquisition, a model that defies the decades. In the early years, they bought companies like BASS (Bay Area Seating Co.), Select-a-Seat and Datatix. The highlight was buying the assets of Ticketron, which had been the dominant player in ticketing when Ticketmaster was born.
A lot of today’s core ticketing system is still the same architecture that was written 40 years ago, Leffler said. “It’s not the same system, but it’s the same architecture that was brilliantly written.” The initial code has been exponentially enhanced, resulting in a system that can handle huge on-sales quickly and reliably.
“This is a system that is still in use today by a lot of the box offices because it is so logical in that it is like a ticket rack in the box office. The retail outlets that we had were an absolute extension of the box office, tied in to the same inventory, so that no matter where you went you had access to the same inventory. We weren’t unique to that, but we did it in a better, more logical way,” Leffler recalled.
Marla Ostroff, EVP, National Accounts, who has been with Ticketmaster for 28 years, is amazed at what the last decade has wrought. “I never in my entire career would have thought technology would change so much. The first 8-9 years, we sold tickets over the phone and at outlets. The biggest concern was big on sales. We became very proficient and continue to be.”
But in the last five years, the technology changes constantly. “I remember when we launched our website in 1995, sold our first ticket in 1996,” Ostroff said. Technology was slower.
Ostroff truly believes the merger with Live Nation and leadership of Michael Rapino has been a positive, “because they understand what we need because they are in our business.”
Today, Ostroff oversees arts and theater and national clients like Feld, WWE, Madison Square Garden, U.S. Open and SMG. In her opinion, “We are true partners now compared to many years ago when we sold their tickets.”
For Ostroff, seeing great people she’s known for years make their mark is a highlight. “It’s become a very large company, but still feels like a mom and pop,” she said.
WHEN TICKETING BECAME MARKETING
Though more recent innovations like dynamic pricing through Pricemaster and commemorative tickets through i6Tix sound sexier, the year Ticketmaster evolved from a ticketing distribution company to a marketing company is the gamechanger that stands out for Feld Entertainment’s Jeff Meyer.
The conscious effort to make that transition began during the regime of John Pleasants, who was president of Ticketmaster in the 1990s, Meyer recalled. “That was incredibly beneficial. We started getting a lot of data that allowed us to compile a lot of records on households in North America, and expanding globally. It allowed us to be a completely different marketing organization as well because we know so much more about the consumer.”
Feld Entertainment, which produces Ringling Brothers & Barnum & Bailey Circus, the Disney on Ice shows, Monster Jam and more, churns through 30 million tickets worldwide each year. In the U.S., they use 15-20 different ticket providers dependent upon the venue’s partner, but 70-80 percent of the business is with Ticketmaster, Meyer said.
“The benefit of collaborating with Ticketmaster helps not only us but them as well,” he said.
TM’s Pricemaster dynamic pricing model is one of the most exciting innovations in today’s marketplace, Meyer said. Feld currently has 43 Ticketmaster venues in the U.S., stadiums and arenas, where it uses Pricemaster, which takes the history of Feld show sales in a specific market along with other third-party data and generates recommendations for price changes based on the algorithms in place.
“It can tell us if we push the button and change the ticket prices, which takes a handful of seconds, there is a cause and effect based on that change, hopefully a positive, based on sales velocity, in real time,” Meyer said.
The solution was built by Rick Johnson and his firm was acquired by Ticketmaster, Meyer said. Feld adopted Pricemaster in 2013 “and now we’re knee deep in it,” Meyer said. “If the model continues to play out, we’ll do as many TM venues as we can.”
Variable pricing had been the norm, based primarily on performance day and time. “We price the show and let it go,” he said. Dynamic pricing allows for much more flexibility and multiple price changes based on seating section, sales volume, weather, program changes, secondary market pricing (300,000-400,000 Feld tickets in the U.S. end up in the secondary market annually), competition in the market and more. Anything that impacts supply and demand can directly affect the dynamic price.
The next innovation is actually retroactive — commemorative tickets. Ticketmaster is partnered with Rodney Moore’s i6Tix out of West Virginia in this endeavor and Feld is testing it with a few brands, intending to roll it out in earnest with the 25th anniversary of Monster Jam which goes on sale in September.
Customers are given the option to buy a collector ticket, printed on lenticular stock with graphics of the show, for an up-charge of $10-$15. The ticket can be customized down to a favorite Monster Truck, Meyer explained. It has already caught fire in the music world and started in the sports world, but dates back to the early hard ticket days.
Meyer will never forget being in Chicago when Jerry Garcia died before the Grateful Dead show at Soldier Field in the 1980s. Hardly anyone turned in those $30 tickets for a refund. It was a keepsake.
Now he’s looking at i6tix samples from String Cheese Incident and Rhianna, to name a few. Welcome to yesterday.